Posts Tagged ‘$4 gas’

Fuel prices continue their run-up, with motorists now paying $4.00 or more in some states.

U.S. fuel prices now stand at an average $3.80 a gallon for regular unleaded, according to the latest pump survey by AAA, with prices topping an average $4.00 in four states.

The pace of the increase has actually slowed, in recent days, and even dropped briefly last week. But analysts anticipate that fuel prices could continue their run-up in the days and weeks ahead, especially as spring approaches and American motorists begin traveling more.

Despite concerns about the impact of rising petroleum prices on the economy, many economic indicators have continued to improve, in recent weeks, car sales, in particular, rising at a much faster rate than anticipated. February’s double-digit surge was significantly better than anticipated and, on an annualized rate, reached the highest level the U.S. market has seen since March 2008.

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Some analysts, in fact, are speculating that the latest fuel price surge might actually be helping the auto industry by driving more motorists into showrooms for small cars. Demand for compact and smaller vehicles surged to 23% of the overall U.S. market in February, up from 17.9% in December.

“If people are looking to replace their vehicle they’re short penciling the fuel economy numbers,” said Joe Phillippi, of AutoTrends Consulting.

But Phillippi cautioned that “there may be a delayed reaction to the fuel price run-up” that, if it continues much longer, could lead to a slowdown in not only car sales but the overall economy.

Monday’s $3.80 average is nine-tenths of a cent above last week’s final average – and compares with $3.51 on this date a year ago. It’s still 31.3% behind the all-time $4.114 average recorded by the AAA on July 17, 2008.

But there are a number of forecasts predicting the price of a gallon of regular self-service unleaded could reach $4.50, perhaps even $5.00 in the coming months as demand for fuel traditionally rises.

The price has already hit $4.00 in Alaska, California, Hawaii and Illinois – the Hawaiian islands recording the nation’s highest pump price at an average $4.44 per gallon, the AAA said. In five other states and the District of Columbia, fuel prices are within a nickel of the $4 mark.

The lowest price in the nation can be found in Wyoming, at $3.30.

The fuel price surge is being blamed on a variety of factors, including Mideast tensions and the fear of a war with Iran over the Islamic republic’s nuclear program. Iran has complicated matters by already cutting off supplies to several parts of Europe, including the U.K.

Ironically, the resurgent U.S. economy has also encouraged the upward trend in fuel prices – as has the strong economic boom in China. In fact, most petroleum analysts argue that fuel prices are no longer primarily set by U.S. demand.

The surge in prices is nonetheless becoming a key issue in the U.S. presidential race, the various GOP contenders blaming Pres. Barack Obama for the run-up. Fading GOP candidate Newt Gingrich has tried to revive his own fortunes by promising to lower prices to $2.50 a gallon if elected. The former House Speaker has declined to outline how he would achieve that, however, and few believe that even an all-out drilling binge would be able to move the needle at the pump much for several years.

Oil prices are approaching a 9-month high raising the specter that gas could again top $4 a gallon in the weeks ahead.

The latest surge follows the early morning agreement to resolve the Greek debt crisis along with Iran’s decision to halt petroleum exports to both Britain and France. Iran currently provides about 18% of the oil used by the European Union but is threatening to further tighten supplies in retaliation for sanctions meant to block its nuclear energy program.

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With oil floating around $105 a barrel on Tuesday morning trading, there is also a growing likelihood that gas prices could become a key issue in the upcoming U.S. presidential election, GOP candidate Newt Gingrich tweeting his followers that, “gas prices are unacceptable”.

Petroleum has been moving up for weeks but the latest surge began when Iran announced a halt to exports to Britain and France, both strong supporters of sanctions aimed at getting Iran to back down on what many believe to be a program to develop nuclear weapons.

A new study finds most buyers ready to switch to hybrids if fuel prices hit $4.50 - maybe.

Industry observers keep wondering what it would take to produce a wholesale shift in the American automotive marketplace. Despite near-record prices last Spring and the brief push to $4 a gallon several years earlier, U.S. motorists have largely continued buying the products they’ve always bought.

But a new survey suggests the market could hit a “wall” at $4.50 a gallon, nearly nine of every 10 “new-vehicle intenders” telling CNW Marketing they would purchase a more fuel-efficient model “immediately” were prices to reach that level. And the vast majority of those buyers said they would specifically be in the market for a hybrid.

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“Toss in the possibility of $5 per gallon gasoline,” said CNW Marketing director Art Spinella, and the study would suggest the hybrid – and presumably electric – vehicle markets should explode.”

A rarity a month ago, $4 gas is now the national norm, some expecting $5 prices in a matter of months.

Late last year, when former Shell President John Hofmeister warned that the U.S. could see $5-a-gallon gas prices by 2012, few took the executive seriously.

“The wolf is out there,” acknowledged Tom Kloza, chief analyst with the Oil Price Information Service, and “we’ll see those numbers at some point this decade, but not yet.

Anyone who has had to fill up lately is starting to take Hofmeister’s dire forecast very seriously. In Michigan, prices rose almost 20 cents in the last week, a pace seen across much of the country. The Los Angeles area is already approaching the $5 mark, at least on premium fuel, and virtually the entire country is now over the $4 mark for unleaded regular at self-serve pumps.

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The surge in fuel costs is triggering a political free-for-all, President Barack Obama blasting the oil companies and demanding an end to oil company subsidies, while wild-card Republican Donald Trump has suggested the U.S. simply grab Mideast oil sources.

Ken Reidy, a contract trucker who maintains his own 18-wheel rig, said he didn’t care about the politics, “as long as someone helps me cut my fuel bill.” Fueling up at a truck stop along Michigan’s I-94, Reidy’s eyes narrowed as he watched the numbers race seemingly every upward, ultimately handing over his credit card to cover an $895 charge for diesel.

Motorists in several parts of the country, notably including Southern California, have seen fuel prices surge past the $4 mark, with many industry observers predicting the country could soon see costs surge past the record figures set during the mid-2008 fuel scare.

With the situation only getting worse in Libya, one of the world’s largest sources of petroleum, analysts are now speculating not just if, but when pump prices in the U.S. could tip the $5 mark. Economists are also worrying what the rapid rise might mean to an American economy that still seems fragile after one of the worst recessions in more than half a century.

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As of Friday, the Lundberg Survey found that U.S. fuel prices had risen 32.7 cents over the previous two weeks, to an average of $3.51 a gallon for self-serve regular. That’s the biggest jump the American market has experienced since a 38-cent run-up between August and September 2005, according to the Lundberg Survey, which follows fuel prices in the continental U.S. That prior record was the result of the damage done to Gulf Coast refineries by Hurricane Katrina.

“This time around, the damage comes not from nature but from people,” said Trilby Lundberg, referring to the Libyan crisis and the broader uncertainty about Mideast oil supplies as the democracy battle rages across northern Africa.

Expect to pay more, but government analysts say the feared surge to $4 a gallon is unlikely in 2011.

Be prepared to see the price at your local pump push towards $4 a gallon by the Independence Day holiday, warns the Department of Energy, in a new fuel forecast.

But the odds favor a less radical run-up, the government predicts, with only a 7% chance we’ll be paying $4 for gas this year. Nonetheless, the DoE’s Energy Information Administration, sees it a certainty that fuel costs will keep climbing from their current level, which is average a bit more than $3 a gallon nationwide.

The EIA says the average price for a barrel of crude oil ran $89 in December 2010, and should push to $93 this year. Considering the figure is already nudging close to $92, it raises the question of whether the government forecast is too conservative. By the end of 2012, the forecast is $99 a barrel, which would still be well short of the record $147 hit in July 2008.

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A steady climb upward would be far more acceptable, according to most economists, than the extreme peaks and valleys seen in recent years – 2008’s high point was followed by a low of $38 a barrel in December of that year.

While a senior Shell official recently warned that prices at the pump could soon be in the $5 range, the Energy Department forecast calls for an average $3.17, across the country, this year, up from $2.78 in 2010. That is expected to climb to $3.29 a gallon in 2012.